Global investment in the renewable energy sector has gone up by 55% since 2010, according to the World Investment Report 2019 released by the International Energy Agency (IEA).
The report states that in 2018, global energy investment remained relatively stable, at over $1.8 trillion, following three years of decline. More spending in upstream oil and gas and coal supply was offset by lower spending on fossil-fuel based generation and renewable power. Investment in energy efficiency was relatively stable.
According to the report, investment in India’s energy sector has grown the most over the past three years.
Mercom recently reported that in 2018, investments in the Indian solar sector totaled approximately $9.8 billion compared to 2017, in which almost $11.5 billion flowed into the Indian solar sector. 2018 witnessed a decline of 15% in investments year-over-year (YoY).
Renewables investment edged down, as net additions to capacity were flat and costs fell in some technologies but were also supported by projects under development. Lower solar photovoltaic (PV) investment in China was partly offset by higher renewable spend in some areas (the United States, developing Asia). Investment in renewable heat and transport edged down but spending on new biofuels plants grew.
The report states that the prices for some efficient goods (like LEDs and electric vehicles) have continued to fall, and many energy efficiency investments are already cost-effective with relatively short payback periods. Still, policy, market, and financing-related challenges have acted as barriers to increased spending on efficiency.
Among major areas, energy investment has risen most rapidly in India in the past three years, up by 12%. In 2018, renewable spending continued to exceed that for fossil fuel-based power amid uncertain financial attractiveness of new coal power, though spending in coal supply has also risen somewhat.
Solar PV spending fell by around 4%, while wind investment remained flat. The dip in solar PV was a contributor to the downward movement in renewables investment, largely due to policy changes in China, where the government is seeking to promote more cost-effective and system-friendly investment. Outside of China, renewables spending in the rest of the world grew by almost 5%.
In India, solar PV spending exceeded that for coal power for the first time, supported by government auctions. In the United States, solar PV and wind investment rose almost 15%, supported by corporate procurement, which comprised nearly a quarter of spending.
In India, total renewable power investment topped fossil fuel-based power for the third year in a row, supported by tenders and uncertain financial prospects for new coal power. Grid investment rose by 4%, with a one-fifth increase in transmission, but spending in distribution remained flat.
The report stated that the use of project finance for financing new projects has grown in recent years, with its largest contribution now in the utility-scale renewable power sector. In 2018, around 45% of utility-scale renewables spending was in projects whose contractual remuneration is determined by competitive mechanisms. These are mostly government programs – such as auctions, which play an increased role in Europe, India and have started in China, among others – but include other arrangements, such as corporate procurement, which is growing rapidly.
According to Mercom’s newly released Q1 2019 Solar Funding and M&A Report, the solar sector received $2.8 billion in corporate funding globally, including venture capital funding, public market, and debt financing. Activity across venture capital funding, public market, and debt financing were up 10% in Q1 2019, compared to Q1 of 2018.
In 2018, investment into India’s renewable energy sector were more than the investments made in the conventional energy (fossil-fuel based) projects in 2017. This milestone was the first of its kind, according to IEA. Solar PV investment rose to record levels, even with investment costs declining by nearly 15 percent globally, as the share of deployment in historically low-cost regions, such as China and India, continued to rise.